Tax Preseason: How to Get Ready for Game Day
Tax Preseason: How to Get Ready for Game Day
As kids head back to school, the smell of fall is in the air, and football season gets underway, small business owners can sometimes get preseason tax anxiety. After all, the end of the year is fast approaching, and there's a lot at stake, so it's time to get your business' finances in shape for game day.
You don't necessarily need a chalkboard scattered with Xs and Os on it, but you should have a plan. Here are a few simple guidelines to help you gear up for the season ahead.
Collect Your Records
Championships are won and lost on the practice field. So, get warmed up for tax season by collecting all the business records you may need to file your tax forms. These include records of all the income you brought in over the past year, including any Form 1099s (1099-MISC, 1099-INT, 1099-DIV) you received.
A winning team also takes all the tax deductions it's entitled to take. As you collect your records, be sure to include your business expenses for the year, such as:
- Travel and transportation costs like mileage and hotel stays
- Office purchases, including equipment and supplies
- Rent and utilities
- Loan interest
- Employee expenditures such as payroll and benefits
Make sure you also have all your back-up documentation, like receipts and invoices, on hand, too.
If you have employees, you need to make sure your W-2s are sent to employees and filed with the Social Security Administration by January 31. Same with any 1099s for contractors you used over the past year.
Pay Attention to Deadlines
You can't score if you don't know when it's game day, so make sure you note when your tax filing deadlines are approaching. The Internal Revenue Service (IRS) provides an online calendar, and you can even schedule calendar reminders to notify you of upcoming due dates. Deadlines set by state and local taxing authorities usually coincide with federal deadlines, but there are exceptions for localized holidays. So, make sure you check them.
Prepare for Changes
Any preseason brings with it the inevitable changes in personnel and league rules. While you get your new employees up to speed, you will also want to learn about any changes to the tax code that may affect your business in the coming year.
There are a number of changes to the federal tax code in 2019 that might affect your tax liability like:
- Adjusted 2019 tax brackets for inflation
- Higher standard deduction amounts (for example, the married filing jointly deduction in 2019 will be $24,400, up $400 from last year)
- No individual mandate penalty for the Affordable Health Care Act
- Higher medical expense deduction threshold and health savings account contribution limits
- No alimony deduction
- Higher retirement account contribution limits
Changes abound at the state level, too. Twenty-three states and the District of Columbia had notable tax changes that took effect on July 1, 2019. Many of these changes are to sales tax laws, especially for cross-state transactions. Make sure you check to see how taxes are changing in your state.
Brush Up on Your Tax Knowledge
As with any game, it's always best to understand your game plan. There are a number of commonly asked question business owners typically have before tax season begins. Questions you may want to get answered include:
- How much does a small business pay in taxes?
- Do I need to file taxes if my business made no money?
- Can I file my business taxes separately from my personal taxes?
- What's the small business tax rate for 2019?
Make sure you understand the answers to these questions, and others, prior to filing your tax forms. The IRS provides lots of tax information for small businesses on its website. Just remember—knowledge is power.
Assemble Your Team
Big wins come down to solid teamwork. Make sure you have the right players on your team as you prepare for tax season and recruit as necessary. You may want to consider getting the help of a reputable professional.
Hiring a tax accountant to do much of your tax preseason work can make sure your taxes are filed accurately, and on time, while making certain that your business gets all the tax deductions, it's entitled to receive.
Some smart planning now will help you in the months ahead, and put you on the path to a winning season.
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